Where does C/AL code sit?

Hello,

I recently got a full SQL Server 2012 database files(.mdf,.ldf....) on one of the implementation projects I'm working on and restored it into my machine using SSMS and then started working on it right away in NAV C/SIDE. Doing so got me thinking and asked myself, where does actually C/AL code reside? is it in SQL Server database or NAV software?

Please share some thoughts.

Thanks,

Fekre